Can public procurement be a lever for relocating activity?

Abstract

The article discusses the potential for public procurement to stimulate the relocalization of economic activity in France, either by encouraging “local” purchases or by gaining market share in foreign public procurement markets. We find that there is limited room for improvement in domestic public procurement, since it results in only a small amount of imports (approximately 8%). If we exclude intra-European imports, this figure decreases to 3-4%, which is similar to the proportions observed in Germany, the United States, or China. As for foreign public procurement markets, we observe that France’s performance is significantly lower than that of Germany, with Germany exporting nearly twice as much as France. However, this difference can be explained by the fact that the ratio between German and French exports to non-European countries is much higher, indicating that France narrows the gap when it comes to public procurement abroad. Furthermore, the remaining gap in export performance could be attributed in part to the structure of French multinational companies, which tend to prioritize having affiliates abroad rather than focusing on domestic operations.

Kevin Parra Ramirez

PhD candidate in Economics, Sciences-Po Paris &

I am a Ph.D candidate at Sciences-Po Paris under the supervision of Prof. Philippe Martin (Sciences-Po) and Vincent Vicard (Deputy Director of CEPII) and Research Economist at Banque de France